It Is a Thriving Market with High Liquidity: Kazakhstan Investor on Why It Is Worth Entering Saudi Arabia
Aslan Sultanov, founder and managing partner of White Hill Capital
As part of our extensive Kazakhstan Global series, we reviewed the unique aspects of Saudi Arabia’s IT ecosystem. Previously, we spoke with experts and startup founders about the best strategies for entering this market — where to start sales to achieve results and why patience is key.
Today, we’re publishing the second part of our in-depth interview with Aslan Sultanov, founder and managing partner of White Hill Capital. Speaking exclusively for Digital Business, he shared insights into Saudi Arabia’s current startup ecosystem, the availability of venture capital, and how readily it’s granted to projects at the pre-seed and seed stages. He also explained what it takes to win over investors and why Saudi Arabia is a great stepping stone for expansion into larger markets.
Raising Investments Over Dinner, $100–200K to Get Started and Plenty of Conversations
«Local Funds Focus More on Projects at the Series A Stage and Beyond»
– Saudi Arabia has only recently started opening up to the world and attracting various tech companies, including startups. How developed is the country now in terms of its IT industry?
– We can say that the ecosystem is in the process of maturing. Around 3-4 years ago, the government began actively investing in tech, innovation, and digitalization. Venture funds have emerged, with national structures investing $200-300 million annually. There are also constant accelerators for various industries, from GameDev to MedTech, and almost every ministry now has a dedicated budget for such programs.
The key point is that Saudi Arabia is now working to catch up with and surpass the UAE in terms of IT and tech development.
– What are the chances for an early-stage Kazakhstan startup to secure investments in Saudi Arabia?
– Local funds tend to focus more on projects at the Series A stage and above, meaning they’re looking at more mature companies. When it comes to pre-seed and seed rounds, these are usually closed with the help of business angels And they can raise $500K to $800K in one evening. In Saudi Arabia, it’s quite common for wealthy individuals to organize dinners at someone’s house, where 10-15 investors attend, each contributing $50K.
Of course, no one will just hand over money. Building trusted relationships is key. People from all over the world come here, including fraudsters and scammers, so investors in Saudi Arabia want to be absolutely sure who they’re dealing with before committing.
«Minimum Price to Enter the Market Is $100-150K, But It’s Better to Have $200K»
– What do you need to do to earn the required level of trust before you can start discussing investments?
– You need to meet two important conditions. The first is to become a truly local company. Simply registering a legal entity in Saudi Arabia isn’t enough. You need to open a fully operational office with employees, including local specialists or outsourced professionals from places like Egypt, for example. And it’s important to have the budget for that. The minimum price to enter the market is $100-150K, and it’s ideal to have $200K to cover operational expenses in the early stages.
The second condition is to demonstrate traction in the Saudi Arabian market within six months. However, this can be challenging without a local partner. A good example is CodiPlay, which is now doing well in the region. They managed to find touchpoints with another portfolio company of Tumar Venture Fund, the AILA project (an AI assistant for schoolers), which has been in the market for some time. As a result, the founder of AILA helped CodiPlay build contacts with schools in Saudi Arabia, while Zhandil Taldybaev, the founder of CodiPlay, connected the AILA team with educational institutions in Kazakhstan and Uzbekistan. It’s a win-win for everyone. But this kind of collaboration is only possible if you find a startup in a similar sphere, size, and stage, with which your product doesn’t compete but rather complements. This makes it possible to establish the right synergy.
– Are there any other specifics to consider when negotiating with business angels or venture fund representatives in Saudi Arabia?
– People here are always willing to connect and ready to make big promises. But in 9 out of 10 cases, this leads to nearly nothing. Saudis enjoy communicating, getting to know someone, learning about their background, and their country. You might talk for two hours but not get anywhere with discussing investments. Securing a firm commitment is truly a challenge. So, you need to be patient and not assume that collecting thousands of business cards will automatically lead to success.
Recommendations play a big role here. In Saudi Arabia, people always consider what you’re doing, who you’re communicating with, and who’s recommending you. There have been cases where startups, including those from Kazakhstan, connected with family offices with bad reputations, and as a result, they couldn’t secure investments from anyone.
Also, the investment cycle here is about 2-3 times longer than in other regions. In Kazakhstan, you can close a round in 3-4 months if your product and financial indicators are solid. But in Saudi Arabia, it can take up to a year.
Demand for High-Quality Service, Large Liquidity, and Building Muscles
«FinTech and AI Projects Are in High Demand Right Now»
– Startups with what solutions have the best chances of succeeding in Saudi Arabia?
– FinTech and AI-related projects are in high demand right now. Many ministries are actively rolling out AI solutions. I recently spoke with the local vice minister of digitalization, who shared that AI assistants have already replaced call center operators in their ministry. This trend is expected to keep growing.
Startups with AI solutions that have been fine-tuned in Kazakhstan can bring them to Saudi Arabia and implement them here — just make sure to quickly translate everything into Arabic.
There’s also a strong demand for high-quality service solutions in the country. For example, we rented a car and had to visit a maintenance center. The experience was terrible, even worse than in Kazakhstan 20 years ago. That’s why the startup CTOgram, led by Zhandos Tursumbaev, has a real chance of succeeding here.
– How strong is the competition in the country?
– It depends on the sector, but it’s definitely not as competitive as in Southeast Asia, for example. If you offer quality products that solve a pain point or help businesses earn more, you will succeed. A good example is the Azerbaijani project Push30. Within just two months, they managed to sign up almost all the sports clubs in Riyadh and attract investments. This success came because they already had a proven solution that worked well in their home market and Central Asia, along with a stable business model. This is a huge advantage when working in Saudi Arabia.
«It Is Possible to Have an IPO Here: Some Projects with a Capitalization of $30-40 Million Have Gone Public»
– So, why is it worth considering Saudi Arabia for startups?
Aslan Sultanov and Igor Ovcharenko, CEO of Al-Farabi Innovation Hub
– It’s a great market with high liquidity, and entering it will be more affordable than in the USA, with less competition compared to places like Indonesia. The procedures to get a visa and register a company are becoming simpler each year, and I’ve noticed that founders are now required to provide far fewer documents. The market is becoming more accessible.
And if you have a really good solution that can drive revenue, it will, of course, attract investment or be acquired.ally good solution that can bring money, it will be of course bought or invested in.
– Is it possible to build a unicorn in this market today?
– Not yet, I believe. While it’s possible to have an IPO here — some projects with a capitalization of $30-40 million have already gone public. I think Saudi Arabia is a great stepping stone to build strength. You can earn well here, attract solid investment rounds, and then move forward to other parts of the world, like the USA or European countries, as you have enough resources.
– What would you advise to those planning to enter the Saudi market?
– The most important thing is to have solid market analysis. To do this, you should attend various thematic forums where you can gather valuable information and make important connections. Also, reach out to Al-Farabi Innovation Hub — we can help assess risks, launch your first pilot, connect you with potential clients and investors, and provide office space. Currently, over 10 startups are being supported by the hub.
We believe Kazakhstan startups entering Saudi Arabia have great potential to become unicorns. The key is to come and start driving the market.
